MVB message to the New York Assembly, 26 January 1829
January 26, 1829.
In my communication to the legislature at the opening of the session, I alluded briefly to the outlines of a plan suggested to me relative to the renewed bank charters. Understanding that it was the general expectation that a full development of its details would be laid before you by me, I have requested its author to furnish me with a more ample statement of his views: and have now the honor to transmit the communication which I have received from him.
Although this plan is of a character somewhat novel yet connected as it is with the most important object, of your present duties, it is at least worthy of your deliberate attention.
The necessarily imperfect notice taken of the subject in my message, has called forth, as I anticipated, expressions of disapprobation from those whose opinions are entitled to much respect. Imperfect, however, as that notice was, it has been sufficient to excite inquiry into its merits, and lead to favorable views on it, on the part of several well informed and capable judges. It was reasonable to expect objection from those who so much misapprehended the proposed measure, as to believe that it designed to cast on solvent banks, an immediate and unqualified responsibility for all those that might become insolvent: It will now be seen that such is not the case. Instead of that immediate, undefined, and unlimited responsibility, it is proposed to substitute for the payment of a gross sum to the state, which has sometimes been exacted as a consideration for the exclusive privilege granted, (and which is still advocated by some) the creation of a permanent fund, to be held as a security against all losses, which our citizens may hereafter sustain, through the failure of banks. This fund is to be raised gradually, and in a manner little burthensome to the banks; to be at all times kept good by them, and instead of going into the public treasury for the general benefit, is to be applied to protect from actual loss, those of our constituents who would otherwise suffer by the failure of banks, improvidently chartered by the state, or unskillfully managed by those to whom they were so granted; and whose paper in the present unavoidable state of our currency, our citizens can scarcely be said to have the option to take or refuse. To this is added a system of supervision, which if fairly carried into effect, cannot fail, it would seem, to protect the contributing banks against further calls; to preserve the fund, and to give to our paper currency the utmost credit and stability. That the charters of the sound portion of the existing banks ought to be renewed, appears, so far as the feelings and wishes of our constituents can be ascertained, to be the prevailing opinion. If you should participate in that sentiment, the questions that will necessarily arise, will be, whether such extension should be without new conditions, and if not, then whether the plan now proposed, or some other and better one shall be adopted-questions which are properly and may safely be left to the wisdom and justice of the legislature. All that is asked for the plan now proposed is your full and unbiassed consideration. If it it should not be approved, the suggestion of it will not have been entirely useless. It has already assisted, and will probably further assist, to give a right direction to the public mind on a very important subject, by causing the establishment of banks, and their regulation to be regarded as a matter of deep public concern, from their effects upon the great body of the people, and not merely as grants made for local accommodation, or to promote the individual interests of applicants and stockholders.
It will be seen that the author has added some reflections touching the propriety of an investment of their capital by the banks, and a change in the nature and form of their discounts. His views, in that respect, have been now for the first time communicated to me, and were not referred to in my message at the commencement of the session. They are expressed with great force and perspicuity, and I lay them before you in the belief that any thing calculated to throw light on a subject of such deep interest, is worthy of your consideration.